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EU: Re-Industrialization More Important Than Climate Change

Florian Eder, Die Welt

The European Commission is beginning to shift away from its current climate policy: “For an industrial renaissance”, the needs of the economy should play a key role in setting environmental objectives in the future.

The EU Commission has re-discovered the importance of industry for economic development. On Wednesday, it will adopt a message that is entitled:”For an industrial renaissance” and states: “Without a strong industrial base, Europe will not be able to prosper.” Industry is “at the core of European economic revival and competitiveness”, says the text.

The commitment to the industrial base is a reaction to its weakening in recent years. Only in five EU member states, the industry’s share of GDP has increased since 2007 according to the Commission. Besides Germany, the countries include the Netherlands, Austria, Lithuania and Slovakia. Everywhere else, and especially in the large countries France, Italy, Spain, UK, there has been a trend towards de-industrialization.

The importance of industry has been falling incessantly

3.8 million industrial jobs have been lost in the same period in the EU. The industry’s share of GDP last year fell to a mere 15 percent. The EU target of 20 percent by 2020, which the Commission will renew in its decision, seems far away.

Against this background, the EU Commission uses lofty words, and yet they suggest a cautious change.

In those areas where the EU can actually do something to strengthen industry, it now wants to do so. It intends to “improve the regulatory environment and to make it more stable and predictable”, according to the proposed declaration for the meeting on Wednesday. In particular, it wants to make EU laws “easier and reduce bureaucratic burdens.” The Commissioners request comparable actions by the Member States and announced to monitor the progress.

“The Commission is on the right track if it rediscovers the importance of industrial production for Europe’s economies,” said the FDP politician Holger Krahmer. He called for the application of this knowledge: “The European industry is exposed to an unprecedented level of regulation. If, in fact, the European Commission considers a renaissance of the faltering industry as important, then some legal frameworks must be fundamentally revised,” said the MEP.

Internal market is the key to more growth

Further trade agreements should do their bit to promote growth. In addition, the internal market, the magic formula for growth in the EU, should give way to further breakthroughs in areas where today 28 different national regimes make it difficult for businesses to expand and to export in other EU countries. This is especially true for the energy and telecom markets, which the Commission wants to open further. Suggestions on how to do that are in the process of legislation.

“After the crisis, the single market can again play its role to revive the economy and to create jobs and growth,” it says.

Therefore, the Commission urges the European Parliament and the Member States to speed up the legislative process. At the EU summit in March, the heads of government will consult on the proposals and impose pressure to act on themselves in this way. The announcement is part of a package of projects and specific legislative proposals by the Commission on industrial and climate policy, which the Commission – coordinated and interlocking – will decide upon on Wednesday.

It amounts to an identifiable shift in emphasis. The policy paper says: “The Commission will take into account industrial competitiveness and technological feasibility in the design of the climate and energy policy framework for the year 2030.” This was to be done “in order to avoid that the difference in energy costs between the EU and its major international competitors expands even further”.

Brussels reaches out to industry

This is an important step, if the EU’s power centre is serious about it: an outreach to industry which has always complained that the EU’s climate policy ignored both feasibility and economic considerations – and has only showed the desire to be the world leader in climate protection. It would appear that this is about to change.

In fact, the evidence is still pending, but the Commission has the opportunity to follow through on Wednesday. In addition to the industrial policy communication, it will then decide about the European climate targets for 2030. Among EU Commissioners CO2 targets are still being discussed. The European Parliament has called for a reduction of 40 percent, which corresponds to the maximum demand in the circle of Commissioners.

However, it is already clear that the new targets are set in a less binding way than the climate targets for 2020. Commission President José Manuel Barroso does no longer want to impose binding goals on the Member States regarding the development of wind and solar energy.

No binding expansion targets

Instead, according EU diplomats, there should be a binding overall EU target for the development of renewable energy sources. The Commission will then assess the corresponding efforts by the Member States relating to reporting requirements, rather than impose any fixed targets.

Another piece of the puzzle makes the signal of a more pragmatic EU climate policy even more evident. Fracking, the extraction of natural gas from shale rock, is largely responsible for the huge benefits the United States enjoys in energy costs for businesses. In Europe, the extraction is more difficult, also technically, perhaps because one would have to drill deeper.

However, the EU does not want to turn down this opportunity. A paper by Environment Commissioner Janez Potočnik, which is also on the Wednesday agenda, provides minimum standards for the protection of the environment and health – but fracking will not be prohibited or restricted.

Translation Philipp Mueller

Die Welt, 20 January 2014